Formula for a crypto millionaire. How to predict a take -off and collapse of bitcoin?

Photo: Dado Ruvic / Reuters

According to February 6, the Bitcoin exchange rate decreased to $ 6,000 - about three times compared to the peak in December last year. Skeptics consider this to be evident that cryptocurrency is a bubble that began to burst. For example, economist Nuriel Rubini, who predicted the financial crisis of 2008, said that the price of bitcoin could “fall to zero”. Others object that he and other currencies have a fair price that can be set using various tools. Theoretically can be used to determine the situation in the market: whether it is in a state of bubble and whether we should expect a collapse.

One of the common techniques is NVT, an indicator taking into account the capitalization and volume of transactions. However, the basic method may not be effective enough. According to the partner of the Cryptolab Capital (San Francisco) Foundation, a graduate of the MBA program at the Steanford University School of Business Dmitry Kalichkin, in particular, he does not indicate the formation of a bubble at an early stage. If you complicate the calculations a little, it proves in an article published on Medium, the method can be more effective. Here are its main theses.

The basic method

Traditionally, financial coefficients are used to evaluate assets. This is a relatively simple and quick way to get an idea of ​​a fair price. It also allows you to monitor the dynamics of prices and compare different assets with each other.

One of the usual indicators is the price/profit (p/e), the ratio of the market value of the share to the annual profit received for the share. If it is tall, this can serve as an indicator that the shares are overestimated. For cryptocurrencies to which the profit indicator is not applicable, a similar coefficient was developed - NVT. He was offered by investors Chris Bernisk and Willy Wu, as well as Coinmetrics experts.

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